China Eyes Expansion in AI Chip Output by 2026
The report reveals that a new fabrication plant dedicated to producing Huawei’s AI processors could begin operations as soon as the end of this year. Two more factories are slated to start running in 2024, sources told the daily.
When fully operational, these three new facilities combined could exceed the total current output of Semiconductor Manufacturing International Corporation (SMIC), China’s leading chipmaker, the insiders said.
Additionally, SMIC is planning to double its production capacity next year for 7-nanometer chips—the most advanced mass-produced technology in China—with Huawei as its largest client.
A surge in SMIC’s production would also benefit smaller Chinese chip firms like Cambricon, MetaX, and Biren, enabling them to secure greater shares of SMIC’s manufacturing capacity.
Chinese companies are rapidly developing next-gen AI chips designed to support a standard endorsed by DeepSeek, China’s leading AI startup.
DeepSeek, supported by the Chinese hedge fund High-Flyer, launched its DeepSeek-R1 large language model on January 20.
The semiconductor industry remains a focal point of tension between Beijing and Washington, DC.
“Domestic output won’t be an issue for long, especially with all the capacity coming online next year,” said an unnamed Chinese chipmaker executive quoted in the report.
“If we succeed in developing and optimizing these Chinese chips to train and run Chinese models in a continuously evolving Chinese ecosystem, one day we will look back at this shift as an even more significant DeepSeek moment,” the executive added, noting the potential to compensate for less advanced hardware capabilities.
Last week, DeepSeek unveiled its V3.1 model, optimized specifically for Chinese chips. The startup’s latest model now utilizes an FP8 data format.
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